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Demographics Dictate Buyer Preferences

by Connie Yoshimura

Did you know seniors are more willing to accept smaller lots?  Younger buyers want more square footage?  And all buyers want a full-sized laundry room!  All this and more is what you can read about in the National Association of Home Builders 2019 housing survey.  Seniors and boomers, having raised their children and barbequed in their backyard, are now pretty much indifferent to lot size.  Over a quarter of boomers and seniors have no minimum lot requirement at all.  In other words, they are ready for townhouse or condo living where all exterior maintenance and lawn care are taken care of for them.  They are part of a ‘lock and leave’ demographic.  They frequently travel to visit grand kids or might even have a second home in the lower 48 to get away from Alaska’s dark winters.


Younger buyers, however, are more interested in lot size.  Thirty-eight per cent of millennials and 37 per cent of Gen X want at least an acre of land.  Although this is a national statistic, it is especially true  in Alaska where having a  piece of the great outdoors is one reason people come to and stay in Alaska.  In Anchorage, that means moving to the hillside where the minimum lot price for an acre is about $130,000.  Then, add well and septic and the cost increases to nearly $200,000. Depending on the size of the home, buyers are now looking at somewhere between $650,000 and $800,000 for a home on that acre plus lot.


These buyers also want more space in their home and garage.  Most likely it’s a triple car garage at least 24 feet in depth to fit that F-150 full bed truck.  There’s also that  extra ‘flex’ room with a yet to be determined use.  It’s just the idea of having more space than in the two bedroom condo or three bedroom townhouse they are currently renting or owning.  The open living concept is  strongly preferred by 49% of these buyers.  Another 37% prefer the kitchen and dining area partially open.  In other words, builders should throw out those plans that  segregate first floor living space.  Today’s buyers could care less about a formal living or dining room.


It’s no surprise that boomers and seniors want single story living.  Here in Alaska over 15% of all sales reported by MLS in 2018 were ranches.  In popular new subdivisions like Huffman Timbers in southeast Anchorage almost a third of the fifty foot wide lots have ranch homes built on them.    


According to the report, basements are more popular in cooler climates and, again, Alaska is no exception.  Almost all new homes in Alaska are built with at least a four foot crawl space rather than the slab on grade that’s popular in warmer climates. The most popular basement is a walk-out followed by a daylight.  A minimum eight foot ceiling height is important and so are lots of windows to maximize livability.


Now, back to that full-size laundry room.  I was surprised to find out that   70% of all home buyers now prefer it on the first floor.  It seems like just ten years ago we moved it upstairs to be near the bedrooms!  I’m going to have to take my own Alaskan survey on that one.

New Mortgage Opportunities for Alaskans

by Connie Yoshimura

First time home buyers account for 31% of all home sales, according to Lawrence Yum, chief economist for the National Association of Realtors. This percentage is down from around 40% of the market from years past.   One reason for this downturn is because  student debt has tripled just over the last decade.   Providing additional frustration is the limited amount of  inventory for new starter homes as builders have focused on more expensive homes.   Despite the fact that interest rates are at near historic 3.35% lows (think back two decades ago when a mortgage rate of 8% seems like a good deal) the needle hasn’t moved up much when it comes to millennials buying their first home.

 

However, help is on the way, at least here in Alaska.  This week Wells Fargo announced a $3.3 million program for Alaskans seeking to buy a new home.   In conjunction with Neighbor Works, which will administer the program and provide education, buyers who qualify with a maximum income of $104,900 for a family of four, are eligible for up to a $10,000 down payment assistance.  Veterans, service members, teachers, law enforcement officers, firefighters and emergency medical technicians, may receive $12,500 in assistance within eligibility requirements.  The only caveat is that  buyers must own and occupy the home for five years in order for the grant to be forgiven.  This program will help 300  Alaskan families purchase a new home and I’m predicting will be quickly absorbed by the end of the year.  Combined with a permanent fund dividend (the amount yet to be determined!) buyers, and particularly millennials, will have an opportunity for home purchase.   

 

Alaska also has a HUD 184 program for Alaska natives which allows them to purchase a home with a down payment as low as 2.25%. The program, which is for all eligible Native Americans, has more flexible borrower qualifications and lower interest rates than conventional rates because the Department of Housing and Urban Development guarantees the loan.   Both of these programs are available through specific lenders so buyers should do their shopping before making any commitment to a mortgage lender.

 

Not eligible for any of these programs?  A recent survey revealed that a third of all first time homebuyers received assistance from a family member.  So forgive and forget all those petty quarrels!  Your lender may actually be sitting next to you at this coming Thanksgiving dinner. 

 

And on a local level, Raven Mortgage, an affiliate of Hultquist Homes, is offering $8,000 in buyer paid closing costs on some of their affordable and finished inventory.  I wouldn’t be surprised if other builders also followed suite during the upcoming Parade of Homes.

 

Combined, these opportunities should help absorb some of the inventory that may be coming on the market as a result of the state’s budget cuts to local programs and schools.  Last week our inventory for single family homes was only 625 so despite all the sunshine and fishing, now may be just the right time to go shopping for a new home.       

How Important is Technology in the Home?

by Connie Yoshimura

Maybe not as important as we are lead to believe with all the gadgets now available from video doorbells to remotely controlled smart refrigerators. A 2018 survey by the National Association of Home Builders ranked security cameras as the most desirable of all technology features, followed by a video doorbell.  I have recently had both installed so I am part of the almost 50% of home owners/buyers who are concerned about security which is a national trend. So its no surprise that three out of the four most desired features are directly related to security.  Can you guess which is the fourth?  It is a feature that helps owners run their homes more efficiently by automatically adjusting  room temperatures, based on the use and time of day.  In other words, a programmable thermostat which 44% of buyers want. Think ‘the nest’ which I  had installed a couple of years ago and am still trying to figure out how to make it work!  That’s about as far as my investment in home technology goes. I do not have a voice activated assistant or a remotely controlled smart oven.  But some tech savvy homeowners/buyers  are also interested in lighting control systems, remotely controlled washer/dryers, even a charging station for their electric car.  But would you be surprised to know that 30% of homeowners have no technology? 

Over the past eleven years, technology features in a new home have gone from zero to almost 50% on the new buyer wish list.    But, you might also  be surprised to know that millennials  are not necessarily the ones for more pushing technology features.  Different generations have different interests in technology.  For example, only 29% of millennials are interested in multi-zone HVAC system, energy management system display and only 34% are interested in lighting control system.  Seniors, on the other end of the generational divide, are more interested in a lighting control system, energy management and here is one that I thought everyone had forgotten about—a central vacuum system. 

One reason why millennials may not be as interested in technology features in their home is affordability.  Seniors expect to pay more for their home and have more financial resources while millennials struggle with student debt and finding or saving funds for the down payment.  It’s not that they don’t want the savvy smart home, it’s that they can’t yet afford it.    

How Important is Technology in the Home?

by Connie Yoshimura

Maybe not as important as we are lead to believe with all the gadgets now available from video doorbells to remotely controlled smart refrigerators. A 2018 survey by the National Association of Home Builders ranked security cameras as the most desirable of all technology features, followed by a video doorbell.  I have recently had both installed so I am part of the almost 50% of home owners/buyers who are concerned about security which is a national trend. So its no surprise that three out of the four most desired features are directly related to security.  Can you guess which is the fourth?  It is a feature that helps owners run their homes more efficiently by automatically adjusting  room temperatures, based on the use and time of day.  In other words, a programmable thermostat which 44% of buyers want. Think ‘the nest’ which I  had installed a couple of years ago and am still trying to figure out how to make it work!  That’s about as far as my investment in home technology goes. I do not have a voice activated assistant or a remotely controlled smart oven.  But some tech savvy homeowners/buyers  are also interested in lighting control systems, remotely controlled washer/dryers, even a charging station for their electric car.  But would you be surprised to know that 30% of homeowners have no technology? 

Over the past eleven years, technology features in a new home have gone from zero to almost 50% on the new buyer wish list.    But, you might also  be surprised to know that millennials  are not necessarily the ones for more pushing technology features.  Different generations have different interests in technology.  For example, only 29% of millennials are interested in multi-zone HVAC system, energy management system display and only 34% are interested in lighting control system.  Seniors, on the other end of the generational divide, are more interested in a lighting control system, energy management and here is one that I thought everyone had forgotten about—a central vacuum system. 

One reason why millennials may not be as interested in technology features in their home is affordability.  Seniors expect to pay more for their home and have more financial resources while millennials struggle with student debt and finding or saving funds for the down payment.  It’s not that they don’t want the savvy smart home, it’s that they can’t yet afford it.    

Anchorage Lacks Multi-Family Housing

by Connie Yoshimura

National home ownership rates fell in the second quarter of this year, according to a recent report in the Wall Street Journal.  The  rate is currently 64.2%, down from 64.3% a year ago.  Here in Alaska, the most recent statistic shows home ownership rate at  63.7%.  That’s a slight increase from the 2017 rate of 63.5% but still below the national average. 

 

But here’s the bad news.  Anchorage’s home ownership rate is only 60.1%--well below the national and state ownership rate.  What exactly does this number mean?  Anchorage has a population of 291,538.   Therefore, assuming the statistics are correct, there are 116,324 residents who do not own their own home in Anchorage.   So where do they live?  They are renting an apartment or room, sharing a single family home or doubling up in some way  or are even homeless.    

 

People tend to rent when there is instability in an economy—whether on a national and/or local level.  Although Alaska is a wealthy state our inability to adequately and effectively  govern our financial and natural resources has a recurring and negative impact  on our  low ownership rate.  Unfortunately, even low mortgage rates hasn’t moved the needle to  increased home ownership. 

 

Adding to our growing housing problem is the lack of newly constructed multi-family housing.  Over 82,000 of our multi-family units were built between 1990 and 1960.  Even the ones built in the 1980’s are now almost forty years old!  And it wasn’t until 1992 that new building codes began to recognize the need for more energy efficiency. These older units add to the renter’s cost for electricity and home heating.  Many are beyond repair by landlords who lack the knowledge or financial capability to bring them up to a standard of acceptable living conditions.

 

But from 2014-15, there were only  668 multi-family units permitted.  From 2016-2018 that number declined by over 30% to just 400 units.  I would be curious to know if these numbers actually replace the units damaged or destroyed by fire and earthquake.   Much of that decline is also a result of the Title 21 rewrite which required new design restrictions for multi-family units.  Few developers can afford the time and consulting hours to work their way through the 836 single spaced pages of restrictions and requirements for a new build. 

Anchorage needs a reset of its priorities.  We are beginning to look like a worn out community and can no longer hide behind hanging baskets and bike paths.  That beautification is only skin deep.

 

Visit me on Saturday in Heather Wood and Sunday  in WestGate from 1-4 pm or email me with comments and questions at [email protected] 

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Dwell Realty
561 E. 36th Ave., Suite 200
Anchorage AK 99503
907-646-3600